A Fair Share: Universal Basic Income, et al…?

A look back at the OECD Forum 2017 session

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Oct 10, 2017
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Panellists welcomed the opportunity of an informed conversation on basic income as developed economies struggle to overhaul their welfare systems, navigating the troubled waters of austerity measures, inequality, high unemployment rates, and grappling to adjust to the technological upheavals of the 21st century. While it was agreed that basic income may not be a panacea, it is generally acknowledged as a valuable way to revisit social protection in a global, digitalised world.

Source: The New Yorker

The concept of a basic income has long been debated not only in theoretical terms but also as a concrete policy option championed by representatives of all sides of the political spectrum. Thomas Moore, the godfather of utopia, envisioned a guaranteed income for the residents of his ideal world. Versions of the concept have also found favour among thinkers as varied as John Stuart Mill, Friedrich Hayek, Milton Friedman, James Tobin and John Kenneth Galbraith. In the late 1960s, Richard Nixon presented a basic income bill, calling it “the most significant piece of social legislation in our nation’s history”. It passed the House of Representatives but not the Senate. 

Universal basic income calculator

The notion of an unconditional income for all may appear heretical in an era marked by anxiety over rising deficits. It confronts policy makers with the very essence of policy making: navigating trade-offs. Those wishing to introduce it will have to find the right fiscal equilibrium for basic income to be sufficiently high and minimise losses for those who receive targeted support from existing systems, such as early retirees, those with health problems, and the unemployed, while maintaining tax burdens at manageable and sustainable levels.

Guy Standing, Professorial Research Associate at SOAS, University of London and author of Basic Income: And How We Can Make it Happen, stressed the fact that the concept of basic income goes against, “the edifice that has been built in OECD countries as it is allocated without any behavioural conditionality and creates a social dividend on the collective wealth of our societies”. A new approach to social justice, basic income may generate greater social well-being, as individuals with higher income security could make more rational choices. Although a Forum participant questioned this and reflected on the ethical and philosophical dimension of the debate, notably calling into question the ability of “future generations to appreciate the need for an education to get on in life”, should basic income become a reality.

Consensus emerged on the fact that a system geared towards greater financial security might also prevent the rise of populist regimes. Kenneth Scheve, author of Taxing the Rich: A History of Fiscal Fairness in the United States and Europe and Professor of Political Science at Stanford University, stated that the case for basic income is a matter of distribution policy, rather than job loss. As advanced industrial economies become more and more ethnically and socially diverse, it has the potential to shift political debates away from the notion of “deserving assistance”, and help generate new political coalitions.

Robots 4 basic income

Source: Euractiv

Unexpectedly some trade union and start-up leaders join forces in this debate, as they realise that the combined trends of workers’ productivity not being rewarded and cognitive, analytical and repetitive jobs being automated are challenging our societies and economies. The argument that IT entrepreneurs create new, high-value jobs is tested by the speed of digital change and its far-reaching impact on unemployment and employability. Co-founder of Vivino Theis Søndergaard’s answer to this conundrum is to tax highly profitable companies a lot more, rather than relying on shrinking income tax, as inequality increases.

Tracking basic income

Policy experiments are gathering momentum in countries as diverse as Canada, Finland, Italy, the Netherlands, Brazil, Namibia and Mexico. In 2016, the initiative GiveDirectly provided cash to 26,000 Kenyans, as part of an experiment to discover how such payments will benefit middle-income and developing societies at risk of being unable to provide wealth-creating manufacturing jobs because of globalisation. Guy Standing mentioned that a similar experiment in India led to emancipatory outcomes as women in particular felt they did not have to comply with traditional social norms, such as wearing a veil, and felt more empowered.

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Finland is very much considered a trend setter in this policy space. By providing a monthly €650 lump sum to 2,000 job seekers, the country seeks to increase incentives for recipients to take up and stay in employment. If they find a job, the basic income will be paid on top of the salary. One of the biggest achievements of this two-year pilot so far is to cut bureaucracy, in a country where over 40 social benefits can be sought. Early findings seem to indicate that an income guarantee does not create disincentives for people to seek employment, as Marjukka Turunen, Director of Change Management at Kela (the agency in charge of this) reported.

Meanwhile, Switzerland held a referendum earlier this year opposing the idea on cost and practical grounds, as the suggested income would have cost three times more than current annual federal government spending, without covering all social services.

Negative Income Tax

Source: Market Business News

A number of variants to an unconditional UBI were also discussed: from a negative income tax in which top-up cash payments would be made to those below the poverty line, to other policy measures such as providing cheaper housing to improve labour mobility, shifting taxes from labour to capital, and significantly increasing funding for job training and re-education.

Fundamentally, this debate brings to the fore matters of collective and individual responsibility as well as the fabric of our societies and economies. Part of the answer lies in a government’s ability to create jobs for all. While basic income may be a rich vehicle for stimulating necessary debates about the challenges of social protection systems, it is at the same time important to confront the more fundamental economic and social implications of a changing world. As Bill Spriggs stated, “We are going to face hurricanes, migration flows linked to climate change and various situations in which we cannot anticipate how current models might adapt. We need basic income so that people can be mobile, make investments, as we don’t yet know who the winners or losers will be”. 

  • Could a universal basic income help to solve some modern society's problems such austerity or unemployment? 
  • Is there a moral justification for UBI? Should previous generations' work be shared among today's society?
  • Can governments really afford to implement a UBI scheme? Could it replace other benefits on offer and reduce bureaucracy?

The Forum Network is an interactive space where concepts are challenged and new ideas are formed to shape better policies for better lives. Comment below to give your thoughts and continue the conversation!


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Session panellists:

Moderator

  • Alain Jeannet, former Editor in Chief, L’Hebdo ; Director, Le Temps @alainjeannet

Speakers

  • Kenneth Scheve, Author, Taxing the Rich: A History of Fiscal Fairness in the United States and Europe; Professor of Political Science, Senior Fellow, Freeman Spogli Institute for International Studies, Stanford University, United States @kfscheve
  • Theis Søndergaard, Co-founder, Vivino @tjesboogie
  • Bill Spriggs, Chief Economist, American Federation of Labor-Congress of Industrial Organizations (AFL-CIO) @wspriggs
  • Guy Standing, Professorial Research Associate, SOAS, University of London, United Kingdom; Author, Basic Income: And How We Can Make it Happen
  • Marjukka Turunen, Director of Change Management, Kela, Finland @MarjukkaTurunen

Watch the session “A Fair Share: Universal Basic Income, et al…?” at the OECD Forum

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